Steve Smith AREINZ
Managing Director

Heavy rain over the last few weeks of autumn wrought major havoc across the country and Northland farmers would have been grateful for the respite. Other areas, especially in South Island, got a lot more than they appreciated and almost no-one was spared.  Now winter has officially arrived and NIWA says we’re in for a warmer than usual season but with more rain. So batten down the hatches, make sure your umbrellas are handy and clean the gutters while you can.

BP continues to blunder through what is now recognised as the United States worst ever environmental disaster. Their share price has fallen by over 40% so, while the cost of the spill has been estimated at around US$1.5 billion, BP’s market capitalisation has been hit to the tune of more than US$70 billion as damages claims are estimated. The international price of oil is bound to jump which will have the inevitable flow-on effects at the fuel pumps here. Meanwhile, Brazil's state oil company Petrobras has been awarded a five-year permit for gas exploration off the East Cape coast which could provide huge benefits for both the local and national economies.

The 2010 Budget announced lower personal and company tax rates, higher GST and the introduction of the ETS (Emissions Trading Scheme). Also advised were changes to Loss Attributing Qualifying Companies (LAQCs) which have been the vehicle of choice for residential property investors for some time. Proposed tax changes to these entities, and to the loss of depreciation write-offs, will make property investment less attractive. It will probably mean some investors selling down their property portfolios and fewer new players entering the market. If you also factor in the average decline in house prices announced for May of around 4%, then the smart money will be looking elsewhere. The significantly greater cash flows and capital gain opportunities that business investments can provide will continue to attract a lot more attention.

The Reserve Bank raised the OCR (Official Cash Rate) last week by 25 basis points, as expected by most pundits. The New Zealand Institute of Economic Research (NZIER) had predicted no change and they continue to be less optimistic than most economists, seeing annual growth around 2%, while others are anticipating closer to 3%.

So while we can't change the weather, save a Greek bureaucrat or plug a leaky pipe-line, we can keep a weather eye out for events that may impact on us and take appropriate action.

Regards,

Steve Smith AREINZ
MANAGING DIRECTOR

• Excellent profits
• Growing year on year
• Strong reputation built on being responsive, reliable and efficient
• Extensive range of top quality, near new equipment
• Well thought out systems that minimise staff levels
• Genuine reason for sale, generous transition support offered

Started in 2006 this business has grown to be a much respected medium sized hire company. Not only is it very profitable but it includes an extensive range of well maintained and valuable equipment. One key to its success is bringing a new “customer service” attitude into the market which has developed strong customer relationships and fostered a great reputation. The business operates in both the residential and commercial markets giving the business a good organisational spread. They have built excellent relationships with large contracting companies and have proven themselves in the large infrastructure project market.  Proven systems and an experienced team ensure projects are well run.

The owners started the business while they are working their way through council consent on a totally separate development project in West Auckland. Health issues and a looming consent deadline mean that the owners must sell this business so they can complete their development and retire.

The two owners work in the business with one responsible for administration, quotes and meetings with customers, quantity surveyors etc. and the other owner responsible for on-site operations including contract crew and staff. They are both supported by a team of casual employees. Flexible working relationships are maintained with staff to avoid large overheads and enable the business to be responsive to customer needs and making them very competitive. A core of four employees is regularly used with the ability to bring on as many other casual employees as a job requires. Of these four employees one is ticketed who can lead the team on site and has been with this business for about four years. Efficient work practices have been established to minimise the amount of staff required.

The business has built a strong reputation and most enquiries come from referrals. They advertise in the yellow pages and their vehicles and equipment are smart and well branded. This is an enormous opportunity for a sales and marketing focussed person to drive this business forward by actively promoting it to the marketplace. The vendors are confident that significant further growth could be achieved by the creation of a website and the proactive canvassing for work with builders and construction companies.

The business has an impressive set-up for the maintenance of scaffolding components, 10,000 to 12,000 face metres of equipment, vehicles etc. The scaffolding equipment is near new, very tidy and well maintained. Pipe is systematically organised into standardised lengths for efficiency. Equipment is certified to Australia/New Zealand safety standards and the business has an unblemished safety record. OSH has twice inspected the business and both times commented on how good their standards were.

Hours of operation depend on the work being undertaken. Residential jobs typically are around 7 am to 3:30 pm, five days a week while commercial jobs can be 7 am to 5 pm up to six days a week. Some large commercial contracts may require the ability for changes to be made 24 hours a day on an as-needed basis.

It operates from premises of about 3,000 square feet with an ample yard, centrally located close to the motorway affording excellent access throughout the Auckland region. The vendor owns the property that the business occupies and is willing to offer a lease on normal commercial terms.

The financial accounts show a consistent growth in profitability, with reported results for year ended 2008 of $397,603, for 2009 of $443,066 and for 2010 of $635,629. This represents a very significant upward trend in the declared cash surpluses, particularly in the current economic environment.

The vendor is keen to sell and will negotiate price and terms accordingly.

Contact Paul Fletcher
09 630 1600, 021 278 0702

Ref: 22135

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Richie Lowe AREINZ

Richie Lowe is General Manager of Affiliated Business Consultants Ltd (ABC) and Immediate Past Chairman of the Business Brokers Division of the Real Estate Institute of New Zealand.